Education Loans in India: A Complete Guide

2-August-2021 |

Education is of prime importance globally for becoming a responsible, socially active and professionally successful individual. People prefer quality education to ensure good jobs and the fulfilment of their life goals. However, such education comes with a huge cost.

An education loan is a prominent way to achieve a sound education from a renowned institution. Students and parents can pay for the tuition fees and other related expenses through different methods. For example, even a guaranteed1 return savings plan can help you meet your educational expenses.

Let us delve a little deeper and understand how you can start your educational journey.

 

What is an education loan?

Education loan is a credit facility provided by financial institutions such as banks to facilitate the process of students getting admissions in reputed colleges or universities in India and abroad to pursue their education. 

 

What does the education loan cover?

The education loan will cover the tuition fees payable to the respective university or college. In addition, it includes the fee structure associated with laboratory and examination fees as well.

An education loan can pay for the caution deposit and the student’s travel expenses as well. Additionally, the purchase of books, laptops, uniforms and other miscellaneous items can be purchased using the education loan. However, it should not exceed 20 per cent of the entire loan amount. The loan also includes projects, student tours and other thesis work that needs to be done to complete the course.

Types of Education Loan

Education loans can be classified based on different factors. Here is what it entails:

     

  1. Based on the study location:

  2. a. Domestic - For students to pursue education in Indian educational institutions. 

     

    b. Overseas - For students planning to pursue their education in foreign universities recognized by reputed institutions.

  3. Based on the type of course:

  4. a. Undergraduate - To pursue a course after 12th grade. It can be a 3-5 year-long course in different domains. 

    b. Postgraduate - To help students pursue an advanced degree in their respective domain or otherwise. It is generally a 2 year-long course. 

    c. Working professional - Education loan is offered for acquiring advanced professional courses to enhance their employment opportunities.

  5. Loan against collateral

  6. a. Immovable assets such as land, house, bonds, fixed deposit certificates, equity shares and recurring deposits can be used as collateral to avail educational loans.

    b. Also, a Letter of Guarantee from a working professional in the home bank can assist students in getting an education loan as well.

There are different ways to avail of an education loan. However, it is based on the financial status and requirement so that a student can choose the right option. 

Who is eligible for the education loan application?

Students can apply for an education loan in India to pursue higher education in India and overseas. Here are the details about the eligibility:

  1. Should be an Indian citizen.
  2. Should have acquired admission in a reputed university for the degree course.
  3. Should have completed senior secondary education for an undergraduate course and a recognized degree for post-graduation.
  4. Should be eligible for courses approved and recognized by the Government, UGC, AICTE etc.

Education loan in India

An education loan in India offers up to 50 lakhs for local students and up to 1 crore for international students. 100% financing is applicable for certain conditions, and a margin of 5% to 15% is applicable otherwise. Parents have to be co-applicants in the education loan process.

The loan repayment can start six months after completing the course and can extend up to 12 years. 

 

Education loan interest rate

The interest rate for education loans varies to a certain extent with different banks based on the requirements. However, the range is between 6.75% to 13% in India. 

What is the education loan process?

The process for getting an education loan in India is relatively simple:

  1. The applicant should get the application and fill in the necessary personal details and the requirements. The education loan details will be present on the official website online or can be received from the branch office.
  2. On receipt of the application form, the bank might call the applicant for an interview.
  3. Once the interview is cleared, the applicant will have to submit the necessary documents like copies of ID proofs, educational qualification certificates, address proofs etc.
  4. Based on the type of loan and the amount, the applicant will have to provide a margin or collateral for completing the process. 
  5. Once the necessary documents are submitted, the application will be approved and further get disbursed.

How can a savings plan help in funding higher education?

Education is a long-term financial obligation. It is acquired by proper planning at different stages in life. If an individual wants to help his children pursue higher education in a renowned university, he can always make money using a savings plan.

Tata AIA Life Insurance provides various opportunities to avail of well-customized savings solutions for all kinds of requirements. 

A guaranteed1 return savings plan is the best life insurance plan in this regard. By availing of this plan, the policyholder will get a life cover and, additionally, guaranteed1 returns as well. The guaranteed1 returns can be available as a lump sum amount or as guaranteed1 regular income post the maturity of the plan.

Furthermore, as the returns are guaranteed1, the policyholder can plan and assure a standard education as desired by his children even in his absence. The saving plans by TATA AIA Life Insurance are beneficial for helping individuals support their education financially.

Also, if a policyholder himself wants to avail of an education loan for his higher education but meets with an unexpected demise, his family can repay the loan with a savings plan. The death claim and the guaranteed1 returns will reduce the burden if accumulated over a long time. 

Conclusion

Education is the best asset one can acquire. Therefore, it is important to get the best opportunities. To avail of such opportunities to study in the best universities, one should make the best of a suitable education loan.

Also, savings plans can be of tremendous help when it comes to availing of a protective life cover and utilising the guaranteed1 returns to pursue higher education.

Choosing the right mode of application based on the financial status and requirements is crucial for a happy beginning of the educational journey!

L&C/Advt/2021/Aug/1405

Need help to choose the right plan?

+91

By submitting your details, you are giving your consent to receive SMS/Call by Tata AIA Life Insurance Company Limited or its representative, with reference to this solicited inquiry even though you may be registered on the DND list. L&C/Advt/2019/Jan/075

Disclaimer
  • Insurance cover is available under the product.

  • The products are underwritten by Tata AIA Life Insurance Company Ltd.

  • The plans are not a guaranteed issuance plan, and they will be subject to Company’s underwriting and acceptance.

  • For more details on risk factors, terms and conditions, please read the sales brochure carefully before concluding a sale.

  • This blog is for information and illustrative purposes only and does not purport to any financial or investment services, and do not offer or form part of any offer or recommendation. The information is not and should not be regarded as investment advice or as a recommendation regarding any particular security or course of action.

  • Please know the associated risks and the applicable charges from your Insurance agent or the Intermediary or policy document issued by the insurance company.

  • Every effort is made to ensure that all information contained in this blog is accurate at the date of publication; however, the Tata AIA Life shall not have any liability for any damages of any kind (including but not limited to errors and omissions) whatsoever relating to this material.

  • 1Guaranteed Returns/Payouts depend on Plan Option, Policy Term, Premium Payment Term and Age at entry